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How Much Is Your New Year’s Resolution Costing You?

Every year once the bills start coming in, the New Year's resolutions to save money, put money away for retirement and/or pay down your debt start to fall by the wayside. New bills, unexpected expenses and temptations are everywhere. Yes, you may want to "throw in the towel" and break your New Year's resolution. You may even be asking yourself why you made the resolution in the first place. The very first thing you should do before deciding to break your resolution is to ask yourself the following questions.

What prompted you to make this resolution?

A good analysis of why you decided to make the resolution will help you uncover costs and sacrifices that you need to deal with in your present situation. Money troubles have a way of seeming bigger than they actually are until you look at your situation objectively. Be honest with yourself. Knowing why you decided to make the resolution will help you in deciding whether or not to break it.

What incentives do you have to keep the resolution?

You need to weigh time and energy costs along with setting achievable goals that you can meet in a timely manner. There has to be some milestones where you will treat yourself or you will fall back into your old spending habits. You can use an electronic chart to gauge how you are doing, track changes on paper and/or do a combination of both. Figuring out what individual incentives you will have for yourself will keep you on track with your resolution and help you reach your goals.

How are you going to keep your eye on the prize?

Having both short term and long term goals that are easily measured can help you count the cost of your resolution. When you know how much it will cost you both physically and monetarily, you will have a better idea of what it will take to reach your ultimate goal and keep your resolution. If you can't articulate what your goals are, there are quite a number of ways you can flesh them out. A good brainstorming exercise is to write down the things you want to do, the costs of doing those things and what obstacles you see to achieving your goal.

What are the costs for you both physically and monetarily?

The costs can be high. You will have to put time and effort into your resolution to make it work. You need to weigh whether or not you want to make monetary sacrifices so you can have peace of mind. You have to look at your own financial situation first to see if it's doable and it won't wreck you to keep the resolution. You have to have determination to see your goal of financial security through to the end. If you are prudent and you weigh all the factors including how much income you can spare without "breaking the bank",then you will achieve your goals.

Good rules to live by

Never take more debt than you can handle

Count the costs before jumping into a new venture

Do your homework and investigate before investing money

Don't panic; Allow others to help you

Pay off the highest debt first-Credit cards

The second thing you should do once you answered these questions satisfactorily is to figure out how you are going to keep your New Year’s resolution. There are many ways you can tackle this, but the first and foremost thing you should do is research companies before you decide to get them to help you and/or invest in them. You may for instance:

Save your money in a savings account

Some, but not all banks offer savings accounts that generate interest. That interest can help you save money for various projects or gifts. The most popular in the pre-Internet days were the Christmas Savings accounts. Today you can save money in an on-line saving account such as ING Direct. Be prepared for low interest rates and a minimum balance requirement. Savings accounts are good when you just want to save a little money for vacation or a major appliance such as a washer.

Put your money in a CD or Treasury bond

A certificate of deposit (CD) allows the recipient to gain interest over the life of the certificate to be paid out when the certificate expires. CDs have a fixed higher interest rate but you can incur a penalty if you withdraw money before the certificate expires. Treasury bonds have the backing of the US government and work the same way as CDs with a fixed interest rate and penalty for withdrawal. You would invest in Treasury bonds to ensure market changes don’t affect your money.

Start a 401(K) with your company or an IRA

Getting your employer to withdraw a set amount before taxes for their 401(K) program is a great way to save money for retirement. Some companies match what you contribute and you gain interest from the 401(K) as well. You should investigate and ask questions before committing your contribution to the company handling your 401(K). An Individual Retirement Account (IRA) is prudent to start when you terminate from your company and need to get money out of your 401(K). Most employers give you the option of keeping your money in their 401(K) but you need to weigh this option carefully. You will have more control over an IRA than you might in a 401(K). Investigate thoroughly companies that handle IRAs and choose wisely who will handle your money. Prepare to pay any maintenance costs and research hidden fees if you plan to do some trading between mutual funds.

Ask for help from a credit repair company

Be very wary when using either a consumer or credit repair agencies to help you repair your credit. Credit repair companies that promise to fix your credit for an upfront fee and/or guarantee that they will raise your credit score will cost you. Be diligent about what you want the credit repair company to do for you. You will have to pay some fees for the actual report and monitoring. Credit repair companies usually bill you from month to month, so it’s a good idea to get everything in writing.

Finally, if you feel a bit intimidated by all the information then you need to step back, take a breath and come back when you’re refreshed. Yes, keeping financial obligations can be draining, but if you take time to weigh your options you’ll have a better chance of making the right decisions

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